Soybeans: foreign supply pressure

Soybeans:Bearish news:Soybeans remain in a downtrend. Sell on the rallies because the market must go lower as South American supplies become available.

Soybean crush of 148 million bushels is 21 million below last year at this time but 4 million tons above market expectations. Soy oil supply is larger than anticipated at 2.85 billion pounds.

At this time, South America is having problems with transportation — both shipping and trucking — but this is temporary. Argentina and Brazil have increased crop production estimates. Brazil expects 2 million more tons, raising the crop estimate to 67 million tons. Argentina has started to harvest beans. Prices in South America are lower than U.S. prices.

China has cancelled 192,000 tons of U.S. soybean contracts. China is expected to tighten credit so as to limit food inflation.

Canada plans to plant 3 percent more oilseed crops this year.

Palm oil prices have weakened, dropping over 2 percent in a week.

World soybean supplies are now expected to reach 60 million tons. That represents an increase of 18 million tons over last year.

Weekly soybean exports were the lowest in eight years.

The current lowest estimate for soybean prices hovers near $8.50.

Weekly soybean export inspections dropped to 31.5 million bushels.

Bullish news: The biodiesel tax credit has been extended one year. It is estimated that biodiesel use will increase soybean crush 10 million bushels. Palm oil supplies are short-term tight, supporting soybeans. March soybean supply is the tightest in six years.

India is expected to import 10 million tons of vegetable oil.

Corn

Bearish news: USDA world corn supply estimates were increased a bearish 6 million tons. The carryover is expected to reach 140 million tons this year. United States export projections were lowered 700,000 tons. The result, if true, would put ending stocks in the U.S. at 1.8 billion tons.

Demand for corn and indeed most grain from the United States is decreasing in the short term. The world grain supply exceeds demand; in other words, we have a grain glut. Grain trading volume has slowed down. The markets remain vulnerable to selling and profit taking. Exports were below market expectations and just under 339,000 tons.

The pull-back in gasoline prices is reducing ethanol prices. Some ethanol facilities are rumored to be closing down.

Argentina has increased corn crop estimates to 53.5 million tons, up 1.5 million since last week.

China is planning to invest in ethanol production using non-grain sources. The government is attempting to increase alternative fuel sources without using corn.

It is predicted corn prices will drop 26 percent from improved seed technology and corresponding yield increases. There is not yet a prediction for soybeans, but improved genetics could cause a similar phenomenon in most crops.

The quality of old crop corn coming out of grain bins has increased, discounting at elevators.

Cattle on feed are down 3.5 percent from last year. The United States pork supply is currently 491 million pounds. That number is 19 million pounds below last year at this time.

Chinese grain imports are expected to increase 7 percent to 44 million tons. High soil moisture could delay planting.

Wheat

Bearish news: Ending supply estimates for wheat are the highest since 1988 and exceed a billion tons. Domestic wheat use is expected to drop 20 million bushels. World wheat supply could reach a whopping 197 million tons with the projected 2 million ton increase. Wheat export inspections of 9 million bushels were way below what the market anticipated.

The United Kingdom expects wheat acres to increase about 10 percent. Australian wheat production estimates were higher last week. France is expected to increase wheat acres approximately 8 percent.

India has a wheat crop that is estimated to be 10 million tons in excess of their target storage reserves. India is having trouble finding customers for their excess wheat.

Bearish news: India anticipates rice production to increase by 2.5 million tons. This is the reason India has not been importing rice after the crop failure last season. Vietnam rice selling is beginning to diminish, but they continue offering rice for sale. Thailand and Vietnam expect another bumper crop.

USDA reduced rice export estimates 1 million hundredweight.

World prices for rice continue to drop.

Weekly exports were low at 55,000 tons.

Rice acres in the United States are expected to increase. World rice production is expected to increase 4 million tons.

Bullish news: Cuban markets are expected to begin buying rice. Trade restrictions and sanctions with Cuba are expected to be reduced or eliminated.

Cotton

Bullish news:Domestic cotton use is now anticipated by USDA to exceed 3.5 million bales. Ending stock estimates have been lowered to 3.2 million bales. On average, consumption of U.S. cotton is twice the ending stock estimate.

World ending supply estimates of 51.4 million bales are extremely tight.

Exports are 4 percent above the five-year average.

China now predicts a significant decrease in cotton production.

Indian production may not be enough to offset lower production in the United States.